This paper generalizes the Global Correspondence Principle by extending, in two major ways, Paul Samuelson's 1971 analysis of the exchange rate response to an international purchasing-power transfer. We analyze the price effect of a shift in any parameter, not necessarily a transfer. We then explore the resulting adjustments in any nonprice variable such as welfare. As our analysis shows, the direction of these adjustments depends neither on whether they are small or large nor on whether equilibrium is locally stable or unstable.
As we approach 1987, the Gordian knot of the international debt problem seems to be tightening again. Rescheduling agreements and requests for new money by several important countries are on the agenda. It will take farsighted and strategic thinking on behalf of all participants to overcome the mounting problems confronting us. Nevertheless, I firmly believe that the problems will continue to be manageable if all participants focus on their long-term interest in coming to a satisfactory solution. It is within that general framework that I would like to approach the topic of this paper. The role of the banks in the debt crisis cannot be seen in isolation. Important interdependences must be considered, including the responsibilities of the debtor countries, the industrialized countries, and the international agencies.
This note challenges the proposition David Lam made in his attempt to examine the relationship between population growth and the distribution of income. In the first 2 sections of his paper in which no income mobility was allowed Lam successfully analyzed the effects of adding to the economy a group of immigrants (with income distribution different from the original residents) on 2 inequality measures. In the 3rd section Lam made the strong proposition that claims in effect in order to determine whether an increase in the ith-income groups fertility would increase or reduce the steady-state proportion of the ith-income group all the information needed is the ith row of the mobility matrix. A counterexample is presented here along with a correction for the error that is made in the derivation of Lams proposition.
Historically, poverty rates for minority individuals and families have been substantially higher than poverty rates for nonminorities. Moreover, after several decades of decline, poverty rates have been increasing for the last decade for both minority and nonminority individuals. The traditional gap between minority and nonminority poverty rates arises primarily within the working class and is largely attributable to differences in minority and nonminority labor market earnings. It also seems clear that much of the recent increase in poverty among the working class is a direct result of increasing employment problems and declining real wage rates. Minority individuals, especially minority males, have been particularly hard hit by these recent labor market trends. Explanations of poverty and racial differentials in poverty rates among the working class derived from conventional economic theory have correctly emphasized limited earnings in the labor market as the primary determinant of individual poverty and differences in group poverty rates. However, it is the contention of this paper that the conventional explanation of how labor markets generate poverty and poverty rate differentials among the working class is seriously limited and flawed, and thus provides a poor basis for generating good antipoverty policy advice. I propose an alternative view of how labor markets work to generate poverty that provides a richer basis for generating good policy advice. I. Conventional Explanations for Working Class Poverty
Thirty years ago, Gary Becker in his now classic work, Economics of Discrimination, sparked renewed interest in an economic analysis of racial income disparities. The volumes of research papers that built on Becker's contribution over the last three decades added a great deal to what we know about the reasons for the wide income differences between the races. One reason was the emergence of several large scale micro data sets of which the 1960 census was the first. Today, analysis is based not only on the 1980 census file but also on several longitudinal data sets best represented by the Panel Study of Income Dynamics and the Parnes National Longitudinal Surveys. Ironically, it is the release of micro data files from two pre-Becker data sets that appears to offer the greatest potential for answering the important questions that remain. In this paper, we use these two data sets-the 1940 and 1950 census files-in combination with the three subsequent census files to describe long-run trends in black poverty. We begin by describing purely labor market developments, but supplement that depiction with a broader look at events that impacted on the black family. The paper concludes with an examination of the downside of black economic progress-the increasing disengagement of many black men from the labor market.
The emerging empirical literature on the economics of arbitration has focused primarily on the behavior of arbitrators under alternative forms of arbitration. This article suggests that it is natural for empirical economists to now expand their focus to include issues related to the behavior of negotiators. In this connection, three key aspects of negotiator behavior are discussed: (1) the decision to settle a dispute voluntarily or to proceed to arbitration; (2) the strategy for selecting an arbitrator; and (3) the final bargaining position to advance before an arbitrator.